APG contracting dollars fell 13% last year

Rick Simis

Lloyd Fox, Baltimore Sun

"We're really optimistic this year," says Rick Simis, president and general manager for defense technology firm ManTech International Corp.'s Aberdeen business unit. "We're well positioned in several areas and looking to see some growth."

"We're really optimistic this year," says Rick Simis, president and general manager for defense technology firm ManTech International Corp.'s Aberdeen business unit. "We're well positioned in several areas and looking to see some growth." (Lloyd Fox, Baltimore Sun)

The value of contracts at Aberdeen Proving Ground plummeted 13 percent last year, but businesses with Maryland locations ended up with roughly as much as the year before.

Even with the overall drop, the numbers are eye-popping. The Army base in Harford County obligated about $13.6 billion in the fiscal year ending Sept. 30 for items that ranged from software engineering to radar equipment, according to the APG Contracting Center.

The national base realignment effort known as BRAC, which sent high-tech organizations from the now-closed Fort Monmouth in New Jersey to Aberdeen,boosted APG's contracting power in a big way during the past decade. But while contract values remain higher than they were 10 years ago, they have dropped substantially since peaking in 2009 — at what in today's dollars would amount to nearly $24 billion.

Some of the boost came in the form of temporary BRAC money, now spent. But federal budget tightening and the drawdown of troops in Iraq and Afghanistan are driving the more recent drop in goods and services purchased by APG, said Bryon J. Young, the contracting center's executive director.

"The Defense Department budget ... is coming down off fairly recent historical highs," he said. "We're looking to be a more cost-conscious consumer."

Companies with Maryland ties haven't, as a whole, suffered in the decline — at least not in the past few years. APG said it had $1.5 billion in contracts with businesses with offices or other facilities in the statelast year. That was essentially the same amount as the year before, and up from about $1 billion in fiscal year 2011, the first time officials tracked that measure.

"The Maryland businesses held their own," Young said.

An Aberdeen-based Army team known as C4ISR, a contracting powerhouse that specializes in defense information technology such as communications electronics and signals intelligence, increased its prime awards to small businesses last year.

The amount rose from about $950 million in 2012 to nearly $980 million last year,said Kenyata Wesley, chief associate director for small-business programs at the Communications-Electronics Command, which is part of C4ISR.

He said the goal is for more small-business contracting growth.

"Typically, small businesses have less overhead," he said. "That drives cost down."

But even with that uptick last year and a steady amount flowing to firms with Maryland connections, the recent past hasn't felt stable to many local contractors. Program cuts and uncertainty over federal budget reductions made it more difficult to do business, said Jill McClune, president of the Army Alliance in Aberdeen, a coalition of defense contractors and othersthat advocates for the installation.

As the Army shuffled money around, some programs that businesses had expected to receive funding did not, McClune said, while others ended sooner.

On top of that, she said, the stopgap funding measures passed by Congress gave agencies less flexibility for new priorities — bad for the cutting-edge research performed at APG. Companies responded with layoffs.

"We saw contraction in various companies, both large and small," McClune said.

Now, though, there's a new budget that locks in spending through Sept. 30 — and a deal that eases sequestration cuts this year and next. Companies doing business with APG see that as a bright spot, said McClune, who works for a contractor that makes gas masks and other protective equipment.

She already notices a difference.

"We see solicitations coming out," she said. "We see some small amount of hiring."

What the budgetdeal does not do is take APG back to the days when billions more dollars flowed from the installation. Last year's contract obligations were down about 40 percent from the 2009 peak.

"You're peddling twice as fast for half the return," said Barney Michel, a past president of the Army Alliance. "So things are breaking free, but it's really tough."

Still, some contractors have managed to grow in the past few years. Defense technology firm ManTech International Corp. has added about 700 jobs in the Baltimore area since 2010, largely in Belcamp — near APG — and in Hanover, in Anne Arundel County, where it handles contracts for Fort Meade.

The company said its work includes field service support, information technology, software engineering and logistics support for APG and the C4ISR organizations there.

"The C4ISR market within the Army is not showing the same effects of drawdown as some of the others," saidRick Simis, president and general manager for ManTech's Aberdeen business unit.

He expects to need more people in the coming months.

"We're really optimistic this year," he said. "We're well positioned in several areas and looking to see some growth. ... Obviously, there are some head winds, but I think we're going to be focused on those areas we're confident will have the continued funding streams."

Aberdeen Proving Ground's contracting dollars are falling, driven by federal budget tightening and the drawdown in the Iraq and Afghanistan wars. But the value of contracts to firms with a Maryland location held steady in the past fiscal year.*

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